In 1959, shortly after the European Economic Community was founded under the 1957 Treaty of Rome, Turkey applied for Associate Membership in the then six-member common market. ... See More + By 1963, a path for integrating the economies of Turkey and the eventual European Union had been mapped. As with many trade agreements, agriculture posed difficult political hurdles, which were never fully cleared, even as trade barriers to other sectors were eventually removed and a Customs Union formed. This essay traces the influences the Turkey-European Union economic institutions have had on agricultural policies and the agriculture sector. An applied general equilibrium framework is used to provide estimates of what including agriculture under the Customs Union would mean for the sector and the economy. The paper also discusses the implications of fully aligning Turkey's agricultural policies with the European Union's Common Agricultural Policy, as would be required under full membership. See Less -
Policy Research Working Paper WPS7059 OCT 01, 2014
Larson, Donald F.; Martin, Will; Sahin, Sebnem; Tsigas, Marino
In Africa, farmers have been reluctant to take up new varieties of staple crops developed to boost smallholder yields and rural incomes. Low fertilizer use is often mentioned as a proximate cause, but some believe the problem originates with incomplete input markets. ... See More + As a remedy, African governments have introduced technology adoption programs with fertilizer subsidies as a core component. Still, the links between market performance and choices about using fertilizer are poorly articulated in empirical studies and policy discussions, making it difficult to judge whether the programs are expected to generate lasting benefits or to simply offset high fertilizer prices. This paper develops a conceptual model to show how choices made by agents supplying input services combine with household livelihood settings to generate heterogeneous decisions about fertilizer use. An applied model is estimated with data from a panel survey in rural Ethiopia. The results suggest that adverse market conditions limit the adoption of fertilizer-based technologies, especially among resource-poor households. Farmers appear to respond to market signals in the aggregate and this provides a pathway for subsidies to stimulate demand. However, the research suggests that lowering transaction costs, through investments in infrastructure and market institutions, can generate deeper effects by expanding the technologies available to farmers across all pricing outcomes. See Less -
Policy Research Working Paper WPS6681 OCT 01, 2013
Larson, Donald F.; Gurara, Daniel Zerfu
In the Middle East and North Africa, food security and water security are tightly entwined. In particular, choices about the extent to which food security policies rely on trade rather than domestically produced staples have stark consequences for the region's limited water resources. ... See More + This paper builds on previous modeling results comparing the cost and benefits of policies to protect consumers against surging international wheat prices, and expands the analysis to consider the consequences of the policies for water resources. A self-sufficiency policy is analyzed as well. Results suggest that trade-based food security policies have no significant effect on the sustainability of water resources, while the costs of policies based on self-sufficiency for water resources are high. The analysis also shows that while information about the water footprint of alternative production systems is helpful, a corresponding economic footprint that fully measures the resource cost of water is needed to concisely rank alternative policies in economic terms that are consistent with sustainable outcomes. See Less -
Policy Research Working Paper WPS6464 MAY 01, 2013
Larson, Donald F.
This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. ... See More + The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time. See Less -
Policy Research Working Paper WPS6262 NOV 01, 2012
Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
In Africa, most development strategies include efforts to improve the productivity of staple crops grown on smallholder farms. An underlying premise is that small farms are productive in the African context and that smallholders do not forgo economies of scale -- a premise supported by the often observed phenomenon that staple cereal yields decline as the scale of production increases. ... See More + This paper explores a research design conundrum that encourages researchers who study the relationship between productivity and scale to use surveys with a narrow geographic reach, when policy would be better served with studies based on wide and heterogeneous settings. Using a model of endogenous technology choice, the authors explore the relationship between maize yields and scale using alternative data. Since rich descriptions of the decision environments that farmers face are needed to identify the applied technologies that generate the data, improvements in the location specificity of the data should reduce the likelihood of identification errors and biased estimates. However, the analysis finds that the inverse productivity hypothesis holds up well across a broad platform of data, despite obvious shortcomings with some components. It also finds surprising consistency in the estimated scale elasticities. See Less -
Policy Research Working Paper WPS6190 SEP 01, 2012
Otsuka, Keijiro; Kilic, Talip; Larson, Donald F.; Matsumoto, Tomoya
Greenhouse gas emissions are largely determined by how energy is created and used, and policies designed to encourage mitigation efforts reflect this reality. ... See More + However, an unintended consequence of an energy-focused strategy is that the set of policy instruments needed to tap mitigation opportunities in agriculture is incomplete. In particular, market-linked incentives to achieve mitigation targets are disconnected from efforts to better manage carbon sequestered in agricultural land. This is especially important for many countries in Eastern Europe and Central Asia where once-productive land has been degraded through poor agricultural practices. Often good agricultural policies and prudent natural resource management can compensate for missing links to mitigation incentives, but only partially. At the same time, two international project-based programs, Joint Implementation and the Clean Development Mechanism, have been used to finance other types of agricultural mitigation efforts worldwide. Even so, a review of projects suggests that few countries in Eastern Europe and Central Asia take full advantage of these financing paths. This paper discusses mitigation opportunities in the region, the reach of current mitigation incentives, and missed mitigation opportunities in agriculture. The paper concludes with a discussion of alternative policies designed to jointly promote mitigation and co-benefits for agriculture and the environment. See Less -
Policy Research Working Paper WPS6080 JUN 01, 2012
Blankespoor, Brian; Dinar, Ariel; Larson, Donald F.
In times of highly volatile commodity markets, governments often try to protect their populations from rapidly-rising food prices, which can be particularly harsh for the poor. ... See More + A potential solution for food-deficit countries is to hold strategic reserves, which can be called on when international prices spike. But how large should strategic stockpiles be? This paper develops a dynamic storage model for wheat in the Middle East and North Africa (MENA) region, where imported wheat dominates the average diet. The paper uses the model to analyze a strategy that sets aside wheat stockpiles, which can be used when needed to keep domestic prices below a targeted price. This paper shows that if the target is set high and reserves are adequate, the strategy can be effective and robust. Contrary to most interventions, strategic storage policies are counter-cyclical and, when the importing region is sufficiently large, a regional policy can smooth global prices. This paper shows that this is the case for the MENA region. Nevertheless, the policy is more costly than the pro-cyclical policy of a targeted intervention that directly offsets high prices with a subsidy similar to food stamps. See Less -
Policy Research Working Paper WPS6031 APR 01, 2012
Lampietti, Julian; Cafiero, Carlo; Larson, Donald F.; Roberts, John; Gouel, Christophe
Arab countries depend heavily on imported food, particularly wheat. Population growth, rising incomes, and climate change will only increase their dependency on wheat imports, thereby making Arab countries even more exposed to international market volatility. ... See More + A recent World Bank study, 'the grain chain: food security and managing wheat imports in Arab countries,' identifies key bottlenecks in the wheat-import supply chain (WISC) and some possible remedies. Efficiency improvements to the supply chain can improve food security. This smart lesson provides a summary of the relevant issues. See Less -
Brief 68184 DEC 01, 2011
Lampietti, Julian; Battat, Michelle; De Hartog, Arnold; Larson, Donald F.; Erekat, Dana
Many experts believe that low-cost mitigation opportunities in agriculture are abundant and comparable in scale to those found in the energy sector. ... See More + They are mostly located in developing countries and have to do with how land is used. By investing in projects under the Clean Development Mechanism (CDM), countries can tap these opportunities to meet their own Kyoto Protocol obligations. The CDM has been successful in financing some types of agricultural projects, including projects that capture methane or use agricultural by-products as an energy source. But agricultural land-use projects are scarce under the CDM. This represents a missed opportunity to promote sustainable rural development since land-use projects that sequester carbon in soils can help reverse declining soil fertility, a root cause of stagnant agricultural productivity. This paper reviews the process leading to current CDM implementation rules and describes how the rules, in combination with challenging features of land-use projects, raise transaction costs and lower demand for land-use credits. Procedures by which developed countries assess their own mitigation performance are discussed as a way of redressing current constraints on CDM investments. Nevertheless, even with improvements to the CDM, an under-investment in agricultural land-use projects is likely, since there are hurdles to capturing associated ancillary benefits privately. Alternative approaches outside the CDM are discussed, including those that build on recent decisions taken by governments in Copenhagen and Cancun. See Less -
Policy Research Working Paper WPS5621 APR 01, 2011
Dinar, Ariel; Frisbie, J. Aapris; Larson, Donald F.
Capital is a fundamental component of agricultural production, and the accumulation of capital is key to growth in agriculture and the process of development. ... See More + Unfortunately, cross-country data sets on agricultural fixed capital are rare. Using a common methodology that allows comparisons across countries, as well as over time, this paper introduces a data series on fixed capital in agriculture, based on national accounts data. The fixed capital measure differs remarkably from the Food and Agriculture Organization's data series on tractors, which has been widely utilized as a proxy for agricultural fixed capital. The authors construct comparable measures of capital in livestock and tree stock. They examine the evolution of the capital stocks from 1970 to 2000, paying particular attention to the changing composition of agricultural capital, as well as differences in the accumulation of capital for high-income and middle and lower-income countries. Using the capital measures in agricultural productivity analyses, the data yield estimated input elasticities substantially different from those found previously in the literature. The authors show explicitly that this is due to the improved data set on agricultural capital stocks, as well as the methodology used in the study. See Less -
Policy Research Working Paper WPS5472 NOV 01, 2010
Butzer, Rita; Mundlak, Yair; Larson, Donald F.
Asia's green revolution in rice was transformational and improved the lives of millions of poor households. Rice has become an increasingly important part of African diets and imports of rice have grown. ... See More + Agronomists point out that large areas in Africa are well suited for rice and are encouraged by the field tests of new rice varieties. So is Africa poised for its own green revolution in rice? This study reviews the recent literature on rice technologies and their impact on productivity, incomes, and poverty, and compares current conditions in Africa with the conditions that prevailed in Asia as its rice revolution got under way. An important conclusion is that, to a degree, a rice revolution has already begun in Africa. Moreover, many of the same practices that have proved successful in Asia and in Africa can be applied where yields are currently low. At the same time, for many reasons, Africa's rice revolution has been, and will continue to be, characterized by a mosaic of successes, situated where the conditions are right for new technologies to take hold. This can have profound effects in some places. But because diets, markets, and geography are heterogeneous in Africa, the successful transformation of the Africa's rice sector must be matched by productivity gains in other crops to fully launch Africa's Green Revolution. See Less -
Policy Research Working Paper WPS5478 NOV 01, 2010
Otsuka, Keijiro; Estudillo, Jonna; Larson, Donald F.; Kajisa, Kei; Diagne, Aliou
While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. ... See More + Results based on a panel survey of Ethiopian farmers suggest that while fertilizer markets are not altogether missing in rural Ethiopia, high transport costs, unfavorable climate, price risk, and illiteracy present formidable hurdles to farmer participation. Moreover, the combination of factors that promote or impede effective fertilizer markets differs among locations, making it difficult to find a single production technology that is uniformly profitable -- perhaps explaining the inconsistency between field studies finding large returns to fertilizer use in Ethiopia and survey-based studies finding fertilizer use to be uneconomic. The results suggest that households with greater stores of wealth, human capital and authority can overcome these hurdles. The finding offers some encouragement, but also implies a self-enforcing link between low agricultural productivity and poverty, since low-asset households are less able to overcome these problems. The study suggests that the provision of extension services can be effective and that lowering transport costs can raise the intensity of fertilizer use by lowering the cost of fertilizer and boosting the farmgate value of output. See Less -
Policy Research Working Paper WPS5235 MAR 01, 2010
Zerfu, Daniel; Larson, Donald F.
Under the Kyoto Protocol, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism. ... See More + Yet Clean Development Mechanism investments have so far failed to reach many of the high-potential sectors identified by the Intergovernmental Panel on Climate Change. This raises doubts about whether the Clean Development Mechanism can generate an adequate supply of credits from the limited areas where it has proved successful. This paper examines the current trajectory of mitigation projects entering the Clean Development Mechanism pipeline and projects it forward under the assumption that the diffusion of the Clean Development Mechanism will follow a path similar to other innovations. Projections are then compared with pre-Clean Development Mechanism predictions of the mechanisms potential market size to discern whether limits on the types of projects entering the pipeline have limited the expected supply of certified emission reductions. Parameter tests suggest that this is not the case and that currently identified Clean Development Mechanism investments will generate offsets in excess of early model predictions. In particular, under favorable circumstances, the mechanism is on track to deliver an average annual flow of roughly 700 million certified emission reductions by the close of 2012 and nearly to 1,100 million certified emission reductions by 2020. See Less -
Policy Research Working Paper WPS5239 MAR 01, 2010
Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
Lessons from six case studies illustrate the complex relationships between international trade, vulnerable ecologies and the poor. The studies, taken from Africa, Asia and Latin America and conducted by local researchers, are set in places where the poor live in close proximity to ecologies that are important to global conservation efforts, and focus on the cascading consequences of trade policy for local livelihoods and environmental services. ... See More + Collectively, the studies show how under-valued common resources are often poorly protected and consequently subject to shifting economic incentives, including those that arise from trade. The studies provide examples where trade works to accelerate the use of natural resources and to exacerbate unsustainable dependencies by the poor, and other examples where trade has the opposite effect. An important conclusion is that local livelihood and technology choices have important consequences for how environmental resources are used and should be taken into account when designing policies to safeguard fragile ecologies. See Less -
Policy Research Working Paper WPS5258 MAR 01, 2010
Larson, Donald F.; Nash, John
The use of carbon-intense fuels by the power sector contributes significantly to the greenhouse gas emissions of most countries. For this reason, the sector is often key to initial efforts to regulate emissions. ... See More + But how long does it take before new regulatory incentives result in a switch to less carbon intense fuels? This study examines fuel switching in electricity production following the introduction of the European Unions Emissions Trading System, a cap-and-trade regulatory framework for greenhouse gas emissions. The empirical analysis examines the demand for carbon permits, carbon based fuels, and carbon-free energy for 12 European countries using monthly data on fuel use, prices, and electricity generation. A short-run restricted cost function is estimated in which carbon permits, high-carbon fuels, and low-carbon fuels are variable inputs, conditional on quasi-fixed carbon-free energy production from nuclear, hydro, and renewable energy capacity. The results indicate that prices for permits and fuels affect the composition of inputs in a statistically significant way. Even so, the analysis suggests that the industrys fuel-switching capabilities are limited in the short run as is the scope for introducing new technologies. This is because of the dominant role that past irreversible investments play in determining power-generating capacity. Moreover, the results suggest that, because the capacity for fuel substitution is limited, the impact of carbon emission limits on electricity prices can be significant if fuel prices increase together with carbon permit prices. The estimates suggest that for every 10 percent rise in carbon and fuel prices, the marginal cost of electric power generation increases by 8 percent in the short run. The European experience points to the importance of starting early down a low-carbon path and of policies that introduce flexibility in how emission reductions are achieved. See Less -
Policy Research Working Paper WPS4957 JUN 01, 2009
Larson, Donald F.; Considine , Timothy J.
Food policy often depends on markets and markets depend on institutions. But how good do institutions have to be before reforms can be launched? ... See More + Relying on well timed surveys of agricultural prices and a joint study by the Government of Bulgaria and the World Bank on agricultural market institutions, this paper presents evidence that performance in food markets improved following significant policy reforms in Bulgaria, although public institutions remained weak. This suggests that even though strong institutions are preferred to weak ones, it can be costly and impractical to delay policy reforms until work on strengthening institutions is finished. Still, measured performance varied by place and by commodity, suggesting that markets developed at different tempos and that the distribution of benefits from improved markets was uneven. This points to the need to address the costs of adjustment as policies change. The paper introduces a new approach to measure market performance based on composite-error techniques. See Less -
Policy Research Working Paper WPS4876 MAR 01, 2009
Sarris, Alexander; Larson, Donald F.
The Clean Development Mechanism, a provision of The Kyoto Protocol, allows countries that have pledged to reduce their greenhouse gas emissions to gain credit toward their treaty obligations by investing in projects located in developing (host) countries. ... See More + Such projects are expected to benefit both parties by providing low-cost abatement opportunities for the investor-country, while facilitating capital and technology flows to the host country. This paper analyzes the Clean Development Mechanism market, emphasizing the cooperation aspects between host and investor countries. The analysis uses a dichotomous (yes/no) variable and three continuous variants to measure the level of cooperation, namely the number of joint projects, the volume of carbon dioxide abatement, and the volume of investment in the projects. The results suggest that economic development, institutional development, the energy structure of the economies, the level of country vulnerability to various climate change effects, and the state of international relations between the host and investor countries are good predictors of the level of cooperation in Clean Development Mechanism projects. The main policy conclusions include the importance of simplifying the project regulation/clearance cycle; improving the governance structure host and investor countries; and strengthening trade or other long-term economic activities that engage the countries. See Less -
Policy Research Working Paper WPS4786 NOV 01, 2008
Larson, Donald; Dinar, Ariel; Ambrosi, Philippe; Mahfuzur, Shaikh
The scale of investment needed to slow greenhouse gas emissions is larger than governments can manage through transfers. Therefore, climate change policies rely heavily on markets and private capital. ... See More + This is especially true in the case of the Kyoto Protocol with its provisions for trade and investment in joint projects. This paper describes institutions and policies important for new carbon markets and explains their origins. Research efforts that explore conceptual aspects of current policy are surveyed along with empirical studies that make predictions about how carbon markets will work and perform. The authors summarize early investment and price outcomes from newly formed markets and point out areas where markets have preformed as predicted and areas where markets remain incomplete. Overall the scale of carbon-market investment planned exceeds earlier expectations, but the geographic dispersion of investment is uneven and important opportunities for abatement remain untapped in some sectors, indicating a need for additional research on how investment markets work. How best to promote the development and deployment of new technologies is another promising area for study identified in the paper. See Less -
Policy Research Working Paper WPS4761 OCT 01, 2008
Dinar, Ariel; Rahman, Shaikh Mahfuzur; Entler, Rebecca; Ambrosi, Philippe; Larson, Donald F.
The paper presents empirical analysis of a panel of countries to estimate an agricultural production function using a measure of capital in agriculture absent from most studies. ... See More + The authors employ a heterogeneous technology framework where implemented technology is chosen jointly with inputs to interpret information obtained in the empirical analysis of panel data. The paper discusses the scope for replacing country and time effects by observed variables and the limitations of instrumental variables. The empirical results differ from those reported in the literature for cross-country studies, largely in augmenting the role of capital, in combination with productivity gains, as a driver of agricultural growth. The results indicate that total factor productivity increased at an average rate of 3.2 percent, accounting for 59 percent of overall growth. Most of the remaining gains stem from large inflows of fixed capital into agriculture. The results also suggest possible constraints to fertilizer use. See Less -
Policy Research Working Paper WPS4536 FEB 01, 2008
Mundlak, Yair; Larson, Donald F.; Butzer, Rita
This note is conceived in an environment where there was some fear that the final phase of opening under North American Free Trade Agreement (NAFTA) will create pressure on local producers of corn, beans and sugar. ... See More + In order to better understand and prepare for such impacts, the Government of Mexico invited the World Bank, together with the Instituto Mexicano para la Competitividad (IMCO), to analyze the potential effects on both producers and consumers of the tariff and quota phase-out on these markets. The study was highly consultative and input was sought from a number of sources including the Ministry of Agriculture (SAGARPA), the Ministry of Public Finance (SHCP), producers and entities from the private sector. This study examines the probable effects on Mexican producers and consumers of this final step. The focus of this study is competitiveness. The analysis considers several dimensions of competitiveness of Mexican producers vis-a-vis their counterparts in the United States, market structure in Mexico and the United States, the impacts of increased import competition on consumers, and most importantly policy options for the government to support producers in responding to increased competition and in taking full advantage of opportunities opened by NAFTA. The study analyzed the impact of partially reversing the policies agreed under NAFTA in these products (which is an option being proposed by some in Mexico), finding that this will on balance be quite costly to the Mexican economy. The notes also include estimates of location-specific production costs, aggregated into variable cost or supply curves for the nation as a whole, which can assist the government in identifying areas most at risk from competitive pressures from NAFTA or other sources. See Less -
Working Paper 78516 DEC 01, 2007
Caballero, Jose Maria; Brandriss, Peter; Nash, Josh; Larson, Donald
|Title||Document Date||Report No.||Document Type||Also available in|
|Agricultural policies and trade paths in Turkey (English) See More +||OCT 01, 2014||WPS7059||Policy Research Working Paper|
|A conceptual model of incomplete markets and the consequences for technology adoption policies in Ethiopia (English) See More +||OCT 01, 2013||WPS6681||Policy Research Working Paper|
|Blue water and the consequences of alternative food security policies in the Middle East and North Africa for water security (English) See More +||MAY 01, 2013||WPS6464||Policy Research Working Paper|
|The cost structure of the clean development mechanism (English) See More +||NOV 01, 2012||WPS6262||Policy Research Working Paper|
|Should African rural development strategies depend on smallholder farms ? an exploration of the inverse productivity hypothesis (English) See More +||SEP 01, 2012||WPS6190||Policy Research Working Paper|
|Aligning climate change mitigation and agricultural policies in Eastern Europe and Central Asia (English) See More +||JUN 01, 2012||WPS6080||Policy Research Working Paper|
|Food security and storage in the Middle East and North Africa (English) See More +||APR 01, 2012||WPS6031||Policy Research Working Paper|
|The grain chain : food security and managing wheat imports in Arab countries (English) See More +||DEC 01, 2011||68184||Brief|
|Agriculture and the clean development mechanism (English) See More +||APR 01, 2011||WPS5621||Policy Research Working Paper|
|Measures of fixed capital in agriculture (English) See More +||NOV 01, 2010||WPS5472||Policy Research Working Paper|
|Can Africa replicate Asia's green revolution in rice ? (English) See More +||NOV 01, 2010||WPS5478||Policy Research Working Paper|
|Incomplete markets and fertilizer use : evidence from Ethiopia (English) See More +||MAR 01, 2010||WPS5235||Policy Research Working Paper|
|Will the clean development mechanism mobilize anticipated levels of mitigation ? (English) See More +||MAR 01, 2010||WPS5239||Policy Research Working Paper|
|Resource management and the effects of trade on vulnerable places and people : lessons from six case studies (English) See More +||MAR 01, 2010||WPS5258||Policy Research Working Paper|
|Substitution and technological change under carbon cap and trade : lessons from Europe (English) See More +||JUN 01, 2009||WPS4957||Policy Research Working Paper|
|The performance of Bulgarian food markets during reform (English) See More +||MAR 01, 2009||WPS4876||Policy Research Working Paper|
|Factors affecting levels of international cooperation in carbon abatement projects (English) See More +||NOV 01, 2008||WPS4786||Policy Research Working Paper|
|Carbon markets, institutions, policies, and research (English) See More +||OCT 01, 2008||WPS4761||Policy Research Working Paper|
|Heterogeneous technology and panel data : the case of the agricultural production function (English) See More +||FEB 01, 2008||WPS4536||Policy Research Working Paper|
|Mexico - Integration of the North American market for sensitive agricultural commodities : policy notes overview and sugar market - implications for Mexican producers and consumers (English) See More +||DEC 01, 2007||78516||Working Paper|